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Most of the balance sheet recession hits on the bottom 80% of income earners.  Even though many in the top 20% are affected, the bottom 80% have what’s called a “high propensity to spend.”  That is, lacking very much in savings, any income they earn is immediately spent on consumption and basic living expenses with modest amounts for luxury toward the upper percentiles.  If the lowest 80% are spending more of their income on debt servicing, that is fewer goods and services they are going to buy.

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